Hey guys, I'm not promoting or even defending things like Palladium's DRM or RIAA's schemes that try to take control away from the user. However, people must fully recognize their economic advantages to understand why they're being pushed so much.
Most people are revolted by the idea of having to pay for each megabyte downloaded, or for each time they listen to a song or use a program. However, on an economic level it makes a lot of sense: the people who benefit the most pay the most, and the casual users pay relatively little.
In the case of internet access, pay-per-bandwidth gives you the most efficient allocation of a limited resource (bandwidth.) Users who need bandwidth the most should be willing to pay for it, and those users willing to reduce their consumption or schedule their downloads at off-peak hours will save money. This makes sense because the customer's prices reflects their share of the total bandwidth cost incurred upon the provider. The notion that this is just a way to "extract more money from the customer" isn't well-grounded, because the cost to the average customer may remain the same. Rather, both the average customer and the company are better off.
The same principle could (in a perfect world) hold for software or music. Neither resource is limited, but the cost of its creation would ideally be covered by users in proportion to how much they benefited from it. Suppose I bought an album by Kid Rock and another by R Kelly, and paid $15 for each. If I listen to R Kelly 80% of the time, pay-per-play would make a lot more economic sense. Combined with a Napster-like service, it would allow me to listen to any song by anyone, without restricting myself to CD's I already bought. I would pay for it, but the price would be comparable to the cost of a few CD's.
You could see how the same holds for pay-per-use software--those using it the most bear most of the burden. If you need Photoshop to retouch a couple pictures, you don't need to pay $600. But if you're making thousands of dollars from 20 hours of Photoshop, you shouldn't have problems paying for those hours. You could also try any other program without paying a large fixed cost. As a customer, you would gain more choice from that! The only issue is that an "unlimited" resource like a program or song is treated like a "scarce" resource: people are encourage to curtail their use of a program. This could be fixed by reducing the cost of each subsequent hour of use of a program (or playback of a song)--i.e. charge $.20 for the first playback, $15 for the second, $.05 for the fiftieth, and $.01 for the thousandth, or something like that.
Alas, the problem in the music/software examples is this: while it's economically feasible, it's not physically feasible! It requires setting up a fascist police state that keeps track of who tries to tamper with their computers trying to unlock their software. But that's a pity, because if such a system could work, I believe we'd have a much healthier software/music business and more satisfied customers.
Most people are revolted by the idea of having to pay for each megabyte downloaded, or for each time they listen to a song or use a program. However, on an economic level it makes a lot of sense: the people who benefit the most pay the most, and the casual users pay relatively little.
In the case of internet access, pay-per-bandwidth gives you the most efficient allocation of a limited resource (bandwidth.) Users who need bandwidth the most should be willing to pay for it, and those users willing to reduce their consumption or schedule their downloads at off-peak hours will save money. This makes sense because the customer's prices reflects their share of the total bandwidth cost incurred upon the provider. The notion that this is just a way to "extract more money from the customer" isn't well-grounded, because the cost to the average customer may remain the same. Rather, both the average customer and the company are better off.
The same principle could (in a perfect world) hold for software or music. Neither resource is limited, but the cost of its creation would ideally be covered by users in proportion to how much they benefited from it. Suppose I bought an album by Kid Rock and another by R Kelly, and paid $15 for each. If I listen to R Kelly 80% of the time, pay-per-play would make a lot more economic sense. Combined with a Napster-like service, it would allow me to listen to any song by anyone, without restricting myself to CD's I already bought. I would pay for it, but the price would be comparable to the cost of a few CD's.
You could see how the same holds for pay-per-use software--those using it the most bear most of the burden. If you need Photoshop to retouch a couple pictures, you don't need to pay $600. But if you're making thousands of dollars from 20 hours of Photoshop, you shouldn't have problems paying for those hours. You could also try any other program without paying a large fixed cost. As a customer, you would gain more choice from that! The only issue is that an "unlimited" resource like a program or song is treated like a "scarce" resource: people are encourage to curtail their use of a program. This could be fixed by reducing the cost of each subsequent hour of use of a program (or playback of a song)--i.e. charge $.20 for the first playback, $15 for the second, $.05 for the fiftieth, and $.01 for the thousandth, or something like that.
Alas, the problem in the music/software examples is this: while it's economically feasible, it's not physically feasible! It requires setting up a fascist police state that keeps track of who tries to tamper with their computers trying to unlock their software. But that's a pity, because if such a system could work, I believe we'd have a much healthier software/music business and more satisfied customers.